Healthcare Cost Growth Slows but Easily Outpaces Inflation

The indices show that healthcare costs covered by commercial insurance plans increased by 7.05% over the year ending in September, down from the 7.81% annual increase reported for August. Medicare claim costs growth slowed to 2.04%, compared to 2.48% in August.

Blitzer says the sputtering economy may be depressing volume for elective procedures.

"In a weak economy and with people concerned about job losses, there is some downward movement in elective treatments," he says. "If someone is afraid of losing their job, do they get the elective work done right away, or do they delay it because they want to be seen in the office and they don't want the boss to put them on the wrong list?"

"The other thing that shows up in a weak economy and low inflation is that salary and wage increases will be less than otherwise," he says. "When hospitals set their salary standards and the inflation rate is 2%, they aren't going to hand out 10% across-the-board raises. They probably would bargain harder for anything they buy from vendors, from aspirins to MRI machines, because money is a little tighter and they are concerned about where the next dollar is coming from."

Jonathan Lauer (11/20/2012 at 10:04 AM)
Healthcare is growing at over double the rate of CPI inflation. Amazing that data like this is so routine that when the insane growth rate it is slightly less bad, it can be spun positively as "slowing". To get out of this mess, we need HC growing slower than inflation for a decade or so. We are trained to expect HC to grow faster than everything else and technology to get cheaper.